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Germany's prosperity in danger: Ifo President warns of decline!
Ifo President Fuest warns of the dramatic situation in the German economy: government consumption is increasing, prosperity is at acute risk.
Germany's prosperity in danger: Ifo President warns of decline!
The German economy is facing a worrying situation. According to the Ifo Institute, government consumption in Germany has increased by over 25 percent since 2015, while corporate investment has fallen back to 2015 levels. Ifo President Clemens Fuest warns of a possible decline in the German economy and describes the current situation as “dramatic”. These warnings indicate that the country's prosperity is in grave danger.
Fuest emphasizes that the stagnating average living standards have a stressful effect. Dies fördert eine gesellschaftliche Spaltung: Während einige Bürger von der wirtschaftlichen Entwicklung profitieren, sehen sich viele anderen mit einem sinkenden Lebensstandard konfrontiert. Darüber hinaus warnt der Ifo-Präsident vor der Gefahr, dass Deutschland in „italienische Verhältnisse“ abgleitet, was auf eine weitreichende wirtschaftliche Instabilität hindeutet.
Urgent need for reform
In order to avert the impending crisis, Fuest is calling for a “comprehensive overall reform concept” that should be presented by spring 2026. This concept should go beyond the existing coalition agreement and also include social reforms. The specific proposals include, among other things, the demand to stop the mother's pension and not to allow contributions to rise any further.
Fuest also emphasizes that companies must be relieved of bureaucratic hurdles, especially with regard to CO₂ documentation, supply chains and the minimum wage. If this succeeds, he sees potential for additional prosperity of up to 146 billion euros annually, which could sustainably strengthen the economy.
Economic forecasts and their meaning
The assessment of future economic development is of central importance not only for economic actors, but also for monetary policy. The Bundesbank regularly produces forecasts that include important economic indicators such as consumer prices, gross domestic product and developments on the labor market. These forecasts are crucial for preparing monetary policy decisions and will be published in June and December.
The Deutsche Bundesbank's forecasts are incorporated into the projections for the entire euro area and influence the Governing Council's assessments of economic development and risks to price stability. This illustrates the far-reaching effects of the current economic situation on Germany and its position in the European context.
For a detailed analysis of the dramatic economic situation in Germany and the necessary reforms suggested by Clemens Fuest, see the articles by Time and Mirror valuable insights.